It was now 1984, and IBM had a different problem: DOS was pretty much still a quick and dirty hack. The only real new thing that had been added to it was directory support so that files could be organized a bit better on the IBM PC/AT’s new hard disk. And thanks to the deal that IBM signed in 1980, the cloners could get the exact same copy of DOS and run exactly the same software. IBM needed to design a brand new operating system to differentiate the company from the clones. Committees were formed and meetings were held, and the new operating system was graced with a name: OS/2.

Fantastic article at Ars Technica about the rise and demise of IBM's OS/2. OS/2 is one of those big 'what-ifs' of the technology world, along the lines of 'what if Apple had purchased Be instead of NEXT' or 'what if Nokia had opted for Android' (sorry). Our technology world could've been a lot different had OS/2 won over Windows 3.x/95.

Do you have any actual source for the claim that Microsoft was pushing windows for $15 a pop?

In any case, the main problem of OS/2 wasn't cost. That OS was DOA because it never had any defined value proposition against the systems it was supposed to supersede or compete against. Not only that, but OS/2 initially was not a good design or product really.